This year, the future appears brighter than for most of the past three years, when Oregon consistently recorded the highest unemployment rate in the nation nearly every month. Economists say high-tech in Oregon may be on the rebound.

"If you look at the national numbers, you're seeing a significant acceleration in business investment and spending," said John Mitchell, regional economist for U.S. Bancorp. Software and computer equipment spending nationwide more than doubled in the most recent quarter, he said, and "a major replacement cycle is under way because lots of stuff from the '90s is getting old." The increased spending will help high-tech companies in Oregon, which ranks 19th nationally for manufacturing.

Intel has announced plans to move flash-memory production from California headquarters to Hillsboro within four years, bringing at least 300 jobs and giving Gov. Ted Kulongoski some evidence to show that the economy is turning around.

"I honestly believe the governor had a big impact on making that happen," said Scott Ballo, spokes-

man for the Oregon Economic and Community Development Department. "He's met with people at the CEO level at Intel twice, and not many governors can do that."

Intel remains the largest industrial employer in Oregon — with 14,500 employees who range from chip production workers to executives. It has invested $5 billion in Oregon since 1999, said company spokesman Bill MacKenzie.

Other Oregon high-tech companies have also shown signs of turning around. Pixelworks Inc., based in Tualatin, reported record sales of $141 million in 2003 for circuit boards that control digital displays for TV sets, computer monitors and other electronic devices.

Pixelworks CEO Allen Alley, who also serves as chairman of the Oregon Council for Knowledge and Economic Development, said the Consumer Electronics Show in Las Vegas showed a high level of interest in the next generation of television sets based on digital, high-definition technology that is expected to drive a resurgence in consumer spending — and benefit many Oregon companies.

But other high-tech companies may have to wait to see significant improvement. At the end of January, Mentor Graphics Corp. cautioned that profits this quarter will be lower than analyst estimates by more than a dime a share. Still, Mentor CEO Walden Rhines expects "a very steady recovery, and a very long recovery, probably extending into 2007-08."

He noted the Oregon economy expanded from its natural resource base of timber to a new and much larger base in high-tech during the 1990s as the nation went through the longest period of sustained growth in its history. "Certainly

the 1990s and year 2000 would be hard to equal in terms of growth,," Rhines said.

But he emphasized the need for more money for public universities expected to train new engineers and computer scientists to fill the higher-paying jobs that can sustain the recovery and expansion of the high-tech economy.

Art Ayre, chief labor economist for the state, says the latest growth estimates are modest through 2011, even with a sustained recovery. "There is expected to be little upward trend in the high-tech manufacturing component, but the amount of change in high-tech is so small, nobody is going to notice much," Ayre said. Some of the reasons for modest expectations, he said, are increasing international competition, a shift in focus to offshore production and a rapidly changing industry.

All that is more reason to increase money going to universities and create jobs that do not depend as heavily on labor trends, Gov. Kulongoski said. He noted that "a number of the jobs that 10 years ago went to Mexico ... are now moving off to China." Kulon-

goski said the future will be "all about chasing the cheapest labor costs, and ... I don't think we can win that battle."